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Fannie Mae Introduces Incentives. Is this a sneaky new tax credit?


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2011 Jun 15, 10:59pm   3,916 views  5 comments

by klarek   ➕follow (0)   💰tip   ignore  

We all know that the first time homebuyer tax credit was a dismal failure. Displacing future sales to the past, driving up already-bubbled prices, giving a false sense of a bottoming market (as well as a sustainable recovery), and creating more underwater homeowners. Are they trying to do it again via Fannie Mae?

http://www.credit.com/blog/2011/06/fannie-mae-introduces-incentives-for-foreclosure-purchases/

Fannie Mae recently announced that it would grant consumers incentives to purchase a home listed on a lender’s foreclosure list between now and October 31 through its HomePath program. Included in these deals is up to 3.5 percent of the final sales price being put toward the closing costs the homebuyer would have to pay.

The incentives are being expanded in an effort to help boost slumping property values in areas badly affected by the national foreclosure meltdown, the company said.

This language is awfully familiar and the 3.5% assistance target hardly seems arbitrary since it's exactly the amount that the FHA requires as a minimum down payment. The tax credit was meant as a "boost" to the housing market. Are they trying to pull the same gimmick here? Will the impact be the same, or will it possibly have an opposite effect, like incentivizing banks and other sellers to come up with more aggressive selling tactics? Will it not "create" buyers like the tax credit did by taking those who haven't saved enough money to "buy" a house and essentially paying for their entry into the market?

#housing

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1   vain   2011 Jun 16, 12:03am  

Yeah I noticed all HomePath MLS listings say there will be a 3.5% credit towards closing costs for quite some time already. The requirement is that you close by a certain date. After the homes are sold, the mention of the credit gets removed from the listing artificially increasing the price of the home to appraisers using it as comps.

2   everything   2011 Jun 16, 12:30am  

I saw an article on Financial times, where they were complaining about how F&F is giving family home buyers, etc. first dibs on the homes vs. investors. Kind of a lame attempt of the government to keep all of the wealth from the 1 percent.

3   klarek   2011 Jun 16, 1:14am  

everything says

I saw an article on Financial times, where they were complaining about how F&F is giving family home buyers, etc. first dibs on the homes vs. investors. Kind of a lame attempt of the government to keep all of the wealth from the 1 percent.

I have no problem with this so long as they're not trying to dodge the minimum DP requirements. Investors (read: flippers) have an unfair advantage. They can pay less since they have cash, then resell the house on the market for a profit, increasing their cash pile. There's nothing that's economically efficient about this.

4   FortWayne   2011 Jun 16, 1:29am  

everything says

I saw an article on Financial times, where they were complaining about how F&F is giving family home buyers, etc. first dibs on the homes vs. investors. Kind of a lame attempt of the government to keep all of the wealth from the 1 percent.

This isn't wrong. Otherwise the only people who can get anything are slime that fancy themselves as investors.

5   vain   2011 Jun 16, 1:32am  

ChrisLA says

This isn’t wrong. Otherwise the only people who can get anything are slime that fancy themselves as investors.

I've noticed the "investors" here usually have a tax address elsewhere where they've just taken out a loan against that property for about the same amount as the investment property.

There really isn't that much cash. They're just taking loans against other properties.

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